Sunday, 31 December 2017

The regularly confused
Owen Jones had an article
out over Christmas in which he laments what he perceives as the rise of
individualism and the demise of solidarity in society (Jones' perception is
based on the results of a survey by the European Commission, where apparently 52%
of the people surveyed are hoping for more solidarity).

Owen Jones predictably
blames all this on what he calls 'Thatcherism' or 'neoliberalism', which,
according to him, has encouraged a maximisation of individualism that has
sought to "bulldoze every last remnant of solidarity we felt".

This is, of
course, utter hogwash, built on the fact that neither Jones nor the European Commission
understands the concepts they are trying to evaluate. Humans do not look to maximise
individualism, we look to maximise utility. In conjunction with this, economics is a proper empirical
method for assessing what humans prefer given many combinations of goods, services
and opportunities for mutually beneficial exchanges. Therefore, what Owen Jones
sees as selfish individualism is no such thing, because the pursuit of human utility
for each individual is underpinned by solidarity in cooperation. Once you factor in the billions of combinations of goods and
services and the billons of combinations of tastes and preferences, you see
that suppliers only provide what consumers desire, and at a price people are
willing to pay.

Consequently, economics
is about human preferences and behaviour played out in the form of mathematics
(utility). For example, indifference curves represent a series of combinations
between two different economic goods, and they play out in geometrical terms when
slopes of indifference curves on a graph reflect marginal value. This is the
very basis on which utility operates - but fairly obviously this is based on
cooperation between buyers and sellers, not on the kind of isolated
individualism that Jones thinks has bulldozed this country.

What Jones
also doesn't understand is that the process that drives the death of failing
industries in the UK
is part of the very same solidarity we were just talking about. Industries that
fail do so for exactly the same reason that salt and vinegar flavoured crisps
succeed at the expense of strawberry flavoured crisps - people are revealing
their preferences and relying on each other to try to maximise their own
utility.

So when small corner shops close because their customers switch to the nearby Tesco; and
when a music store closes because people download their tunes straight from the
Internet; and when businesses are made better off by importing Chinese steel
than by supporting British steel, there is no bulldozing of solidarity - just cooperation
with more efficient agents for the benefit of increasing utility.

The market's
revealed preferences are simply instances of increasing utility spread thinly
across society, whether that's by producing things cheaper, using fewer
resources or being more efficient with time. These matters of individual utility
are part of solidarity in cooperation; they are not at odds with solidarity as Jones thinks.
Cooperation helps individuals to maximise net utility.

Friday, 29 December 2017

In just one generation, Venezuela has gone from being one of the richest
countries in the world to 2nd to last, just above to North Korea. Today, people are
starving and Nicolas Maduro's military and police forces are set against the
civilians protesting in the streets.

How could this happen? In a word:
Socialism.

Overly-simplistic?
Yes! But the kernel of the point is a valid condemnation of a system of thought
that has brought about mass misery every time it has been tried. This point
wouldn't be so compelling were it not for the fact that currently in the UK the
leader of the opposition, Jeremy Corbyn, is a vocal advocate of Venezuelan-style
socialism, and wishes to impose something similar on our country. To that end, the only thing more shocking than the lack of disgust at Jeremy Corbyn and John McDonnell is the shock that so many people will give his facile and dangerous
policies the time of day. Let me explain why.

One pretty
normal thing about human beings is that we positively promote things that are
good for us and no one bats an eyelid. Protein is good for us, as are
carbohydrates, as is exercise, fresh air, happiness and security. A writer who
advocates the virtues of any of those things is not likely to be heavily
criticised.

Alas, humans
do not always follow this consistency through; for there are some things that
are really good for humans that many don't take full advantage of. Perhaps the
most obvious example of this is how so many fail to value the quality of
revealed preferences and the value in having freedom to make personal
decisions. In fact, quite often they advocate having a state that makes those
decisions on their behalf with far less knowledge than the agents in question. It is, in my submission,
one of the most absurdly
self-impeding things we do: it's part of the human propensity for lazy thinking and uncritical delegation - what William Blake called the 'mind-forged manacles'. Why socialism never worksSociety is made up of billons of life choices each
day, and the prices we see in the marketplace are a reflection of those choices
and the value we place on things. Cars are popular among 50 year olds, whereas
roller skates are not, because 50 year olds tend to prefer cars to roller
skates. Beer is more popular than mint tea in a nightclub because people value
beer more than mint tea when they are clubbing. These are society's revealed
preferences, and prices reflect those wants and needs.

In most cases,
therefore, when choice is involved, society would be better off if resources
(labour, goods and services) were allocated based on individual preferences, not
on top down nationalisation. Our country's defence, for example, is fine as a
nationalised service, because everyone wants to feel protected from foreign
attacks, and few people want to spend much time and energy choosing between
different defence alternatives.

You can make a
similarly good case for road maintenance and the police force. But most things
we consume are not of this kind - we value the choice to spend our money on
what personally benefits us, and society thrives on the basis that our choices are
all different.

The Venezuelan
problems, though numerous and complex, belong to what's known in economics as
the economic calculation problem - which is that centrally planned economies
are dangerous and inefficient because they lack reliable price signals, and
therefore fail to distribute resources rationally. As has been seen in every
country that has tried a state control of an economy, what it leads to is shortages,
brutality, oppression, mass suffering, and ultimately total immiseration of the country.

The main
problem with command economies is that there is no rational employment of capital
goods, which stifles vital information signals about how much to produce of
what, who desires what, and how much they desire it. Socialism, by centralising
the ownership of capital goods, necessarily skews the markets in which these
goods are traded, which tramples all over evidence-based economic calculation.

With skewed
markets for production, you get skewed prices, which impairs the ability to
decipher which lines of production should be pursued, and for how much. That is
the base reason why socialism produces material hardship and free markets
produce material abundance - there is no magic overseer of markets, it is just
that free exchanges in markets allow for much more information-clarity, which
is what enables the right amount of stuff to be produced, for the right price, and
with as few distortions as possible.

Corbyn's
Labour Party, with shades of Venezuela,
represents everything that is crass, foolish and dangerous about political influence
in the free exchange economy. I wonder if it's too much to ask that Venezuela's
calamitous retrogression will be enough to awaken the young Corbynites from the
sleep of their foolishness. It is the season for miracles, after all.

Thursday, 28 December 2017

Many of the
big questions people ask are the same questions that they have debated to
death for centuries, mostly with no resolution. If we've seen one thread on
free will, God's existence, absolute morality, capital punishment, abortion,
and questions of that nature, we've seen hundreds.

To my mind,
the most probable reason why many of these questions linger is that the
questions that are being asked are unreasonable ones. By 'unreasonable' I don't
mean it's wrong to ask such questions, I mean they are probably being asked in
the wrong way.

Here's a
useful tip. Whenever you ask a question, you would be advised to consider
whether that question can actually be reasonably asked in the way you are asking it. And as a corollary, you are also at the same time asking whether it can be answered. If the answer to the first part is 'no', the answer to the second part is going to be 'no' as well.But how do you ascertain whether a question is being reasonably asked? Here's my tip on how you do it. If
either or all of the answers you are considering in relation to a question
would sit equally well with the reality you perceive, whereby each putative
conclusion bears no change to the reality you perceive objectively, then your
question cannot be reasonably asked.

Let me make
that simpler by giving two examples of questions that cannot be reasonably
asked, as per the above. Question 1: Did God cause X to happen? Question 2: Do we have free will?Again, by that I don’t mean it’s unreasonable
to speculate on these questions (and I have done), I mean they are questions
where either answers leaves us in the same epistemological position.

The question Did God cause X to happen? – must be
followed by the question; is there any X in nature that can be explained by God
that can’t be explained by nature, and vice versa? Empirically speaking, there
is not. Similarly, the question Do we
have free will? must be followed by the question; is there any action that
can be explained by our free will that wouldn’t have otherwise occurred if we
don't have free will? Again, there is not.

Over the years
I've often found myself saying to antagonists that the answers they get will
likely be as intelligent as the questions they ask, and that the rewards of
what they get out of an enquiry will be roughly commensurate with the resources
they put in. In cases like the above, though, we sometimes just have to remind
ourselves that some questions are more interesting than answers, and that badly formulated questions will leave people on an endless treadmill of mediocre, unfruitful debate until they are executed properly.

Friday, 22 December 2017

This is the first time
I've ever let someone else write a Blog post here, but I figured regular
readers who are interested in the sort of things I write about would probably
be interested in this, taken from the intriguing book that is Superfreakonomics by Steven D. Levitt
and Stephen J. Dubner. If you're anything like me, you'll probably notice the
trade-off between counter-intuitiveness and rationality, and that there's a
sleight of hand going on in order to make the argument fly, but it's something
you'll likely be glad you got to consider:

Many of life’s decisions are hard. Some decisions,
meanwhile, are really, really easy. Imagine you’ve gone to a party at a
friend’s house. He lives only a mile away. You have a great time, perhaps
because you drank four glasses of wine. Now the party is breaking up. While
draining your last glass, you dig out your car keys. Abruptly you conclude this
is a bad idea: you are in no condition to drive home.

For the past few decades, we’ve been rigorously
educated about the risks of driving under the influence of alcohol. A drunk
driver is thirteen times more likely to cause an accident than a sober one. And
yet a lot of people still drive drunk. In the United States, more than 30 percent
of all fatal crashes involve at least one driver who has been drinking. During
the late- night hours, when alcohol use is greatest, that proportion rises to
nearly 60 percent. Overall, 1 of every 140 miles is driven drunk, or 21 billion
miles each year.

Why do so many people get behind the wheel after
drinking? Maybe because— and this could be the most sobering statistic yet—
drunk drivers are rarely caught. There is just one arrest for every 27,000
miles driven while drunk. That means you could expect to drive all the way
across the country, and then back, and then back and forth three more times,
chugging beers all the while, before you got pulled over. As with most bad
behaviors, drunk driving could probably be wiped out entirely if a strong-
enough incentive were instituted— random roadblocks, for instance, where drunk
drivers are executed on the spot— but our society probably doesn’t have the
appetite for that.

Meanwhile, back at your friend’s party, you have made
what seems to be the easiest decision in history: instead of driving home,
you’re going to walk. After all, it’s only a mile. You find your friend, thank
him for the party, and tell him the plan. He heartily applauds your good
judgment. But should he? We all know that drunk driving is terribly risky, but
what about drunk walking? Is this decision so easy?

Let’s look at some numbers. Each year, more than 1,000
drunk pedestrians die in traffic accidents. They step off sidewalks into city
streets; they lie down to rest on country roads; they make mad dashes across
busy highways. Compared with the total number of people killed in alcohol-
related traffic accidents each year— about 13,000— the number of drunk
pedestrians is relatively small. But when you’re choosing whether to walk or
drive, the overall number isn’t what counts. Here’s the relevant question: on a
per- mile basis, is it more dangerous to drive drunk or walk drunk?

The average American walks about a half- mile per day
outside the home or workplace. There are some 237 million Americans sixteen and
older; all told, that’s 43 billion miles walked each year by people of driving
age. If we assume that 1 of every 140 of those miles are walked drunk— the same
proportion of miles that are driven drunk— then 307 million miles are walked
drunk each year.

Doing the math, you find that on a per- mile basis, a
drunk walker is eight times more likely to get killed than a drunk driver.
There’s one important caveat: a drunk walker isn’t likely to hurt or kill
anyone other than her- or himself. That can’t be said of a drunk driver. In
fatal accidents involving alcohol, 36 percent of the victims are either
passengers, pedestrians, or other drivers. Still, even after factoring in the
deaths of those innocents, walking drunk leads to five times as many deaths per
mile as driving drunk.

So as you leave your friend’s party, the decision
should be clear: driving is safer than walking. (It would be even safer,
obviously, to drink less, or to call a cab.) The next time you put away four
glasses of wine at a party, maybe you’ll think through your decision a bit
differently. Or, if you’re too far gone, maybe your friend will help sort
things out. Because friends don’t let friends walk drunk.

Monday, 11 December 2017

Today is December 11th,
and the chances are that at some point today you've seen at least one of the
many articles doing the rounds informing you that December 11th is the most
fertile day on the calendar in the UK. There are articles (albeit old
ones) in The Telegraph, The Daily Mail, The Guardian, and The Times being
shared around Facebook, all making the claim that more babies are conceived on December
11th than any other day of the year, and that apparently this happens year on
year.

Despite appearing in
reputable newspapers, my initial instinct was that this story is poppycock, and
that what we are seeing with this account is lazy, uncritical journalism. Save
for one of those extremely rare coincidences that one expects every now and
then when the law of large numbers throws up some irregular statistical
patterning, the probability of the same day each year being the most fertile
day of the year is vanishingly small. There are just too many variables and
complex interlinking causes for such a peculiar pattern to emerge, and I could definitely
smell a rat.

So after a bit of probing,
I found out that December 11th is not consistently the most fertile day on the
calendar in the UK,
this was simply an example of the researchers distorting the evidence. It turns
out on closer inspection that they merely did a survey collating people’s
birthdates and found that September 16th is the most popular within that survey
period (and by slight margins). This is not the same thing as saying that year
on year December 11th is the most fertile day on the calendar in the UK - the search
space consisted of only a small, unrepresentative sample that would hold to no
patterned regularity once broadened.

One thing of interest though

Even though it turns out
that the specific date reported is untrue, it is apparently true that December
is the most fertile month of the year on a consistent year by year basis, and
that is something that may still be of interest to readers here. The fact that
there is consistently a particular month of the year when most sexual unions occur
ought to be no surprise really, particularly if there are regularities in human
behaviour that could easily cause such a statistic to be true.

I can think of three
reasons why December might be the most fertile month of the year:

One is that
colder air helps to improve sperm quality. Actually, I didn't think of that one
- it was reported after the media consulted a biologist. What the biologist
didn't mention, though, is that by itself that's not compelling, because the 'colder
air' factor should only narrow it down to winter months, not specifically
December.

Two is that quite a few parents plan pregnancies in December so that
their children’s birthdates are in September, which increases the probability
that their children are among the oldest in their school year (giving those
children an advantage).

Three is that early to mid December is when the
country has lots of Christmas office parties and work nights out*, which might
amount to an increase in sexual activity in early to mid December.

So my best guess is that
it’s a combination of the colder weather, school planning, and Christmas
conjugation that gives us the statistic that December is the most fertile
month on the calendar each year.

* Note that Christmas office parties usually happen on
Fridays and Saturdays, and those days are different dates each year, which
increases the spread of probability away from any specific date in December.

Sunday, 10 December 2017

I have three radical, brilliant and yet wacky
ideas for how to revolutionise our political system. The first one involves
ditching constituencies and drastically reducing the number of MPs with a new
system of representation (your local council could fulfil any need your MP can).
The widespread mediocrity of our MPs is a lot to do with the fact that they are
working within a system that does not provide much of an incentive for moral
probity or intelligent policy-making.

It's only when professional people are
accountable for their actions or words that we lessen the duplicity and
complacency. I doubt we would have seen the MP expenses scandal nor be
subjected to the regular tosh to which we have become habituated if we had
upstanding MPs who feared the opprobrium (and voting power) of the electorate,
and had to conduct themselves with integrity and intelligence to secure their
next vote.

The main cause of this lack of incentive is that
too many MPs are in safe seats in their constituency, and party associations that
choose the candidates for constituencies can ensure that those in Ministerial
roles get the safest seats. My antidote to this is a whole new system that
instils some kind of accountability to MPs, and ideally brings in a better and
more scrupulous calibre of candidate, and a more carefully thought out voting process.

Idea 1

First we need to decimate the notion of votes
attached to constituencies according to geographical borders. As a
replacement, my radical proposal would be that candidates will stand to
represent surnames demarcated into sections of the alphabet, not regions of the
country. We could reduce the exorbitant number of MPs down to about
500 (that'll save on expenses) - and then have a system in which MP 1
represents everyone whose surname begins with Aa-Ad, MP 2 represents everyone
whose surname begins with Ae-Ah, and so on.

Under such conditions, an MP really would have
to work hard to forge a good reputation and the prowess for positive influence,
because the people he or she represents would be all over the country, and they
would make up a body consisting of a diverse range of classes, cultures and
ethnicity. MPs are much less likely to be complacent if they are required
to have a positive impact on tens of thousands of people scattered across the
country rather than people concentrated in a specified area of the country -
they will have to think more innovatively about plans, policies, investments
and strategies.

And instead of having constituents and holding
surgeries, elected MPs could get involved with local issues through regional
councils, primarily motivated by doing good, honest, decent work for the region. There
may be occasions when conflicts of interests occur between a local person
and a person he or she represents alphabetically, but I don't expect them to be
too frequent. Put this system in place and I'll bet we'd see a higher standard
of MPs, in a system in which Westminster
attracts more candidates who want to be MPs for the right reasons.

Idea 2

In
addition, my second idea adds even more intellectual and moral scrutiny to the
process - because in order for MP 1 to represent everyone whose surname begins
with Aa-Ad, and MP 2 to represent everyone whose surname begins with Ae-Ah, and
so on, we could try to lessen party political biases and tribalism by offering
category distinctions between policies and parties. In other words, rather than
everyone whose surname begins with Aa-Ad voting for a party candidate, they
could instead be asked to tick boxes for a large range of policies they support
(after reading intelligent annotated arguments for the costs and benefits of
each policy - we could make this mandatory), while being blind to the parties
to which those policies belong.

I got this
idea during the last election, after clicking on one or two of those websites that attempt to tell you
which party it thinks you should vote for based on a series of policy selections
you've made from behind a Rawls-type veil of ignorance, blind to the parties to
which those policies belong. It’s obviously
not totally blind, as it’s fairly easy to tell which policy belongs to which
party in the most obvious areas - but it certainly was the case that when
people did the exercise they frequently ended up being most closely aligned
with parties that were not the parties for whom they would usually vote.

Being more
economically right wing than most, and more socially left wing than most, when
I partook in the exercise it was clear that I am further from all the
mainstream parties than any of them are from each other, which means there is
no obvious party for me to vote for. However, this isn't true of the average
voter - in fact, rather worryingly, a poll
seemed to indicate that if people voted
for policies not personalities, the Green Party would have won the last
election - which does rather suggest that the average voter is likely to make a
real mess of things with a policy-only vote, and that democracy would not be
all that safe in their hands.

Idea 3

This is where my third
idea can help - because, as I talked about in this
Blog post, I think the nation pays too much regard to the so-called
qualities of democracy. Leaving decisions and policies that require
intelligence and evidence-based analysis in the hands of largely uneducated and
short-sighted populations is highly overrated. What's needed, in my view, is a
voting system comprised of fewer, smarter voters - but having tweaked my system
a bit, I'd now wish to incorporate my two above ideas into it.

Added to my above system
of having MPs represent surnames rather than constituencies, and voters voting
on policies not personalities, I'd also want the outcomes to be in the hands of
far fewer, more educated voters - maybe with something resembling jury duty,
where a random selection of the population (to ensure a proportional
representation of sexes, ages, ethnic backgrounds, income groups, religious
beliefs, political views, education, and so forth) - let's say 50 people for
each letter group (at 500 groups, that's 25,000 voters) - are called to partake
in a rigorous voting process involving careful, considered analytical scrutiny
over a number of weeks.

So here's
how it would work. The first step is to ensure that voters voting in my reduced
voter election are better apprised of the facts, and of the pros and cons of
all policies (the seen and the unseen). Rather than
decide where your vote should go based on personalities, the 50 x 500 chosen
voters get to spend a number of weeks, getting paid for their time, studying
the economic, sociological and philosophical tenets of all aspects of the
policies in front of them, attending lectures from speakers of both sides of
the argument, partaking in group discussions and becoming involved in debates
orchestrated by experts in the fields (the benefits of the outcome would
more than pay for the financial costs of this, and some of the offsetting
savings will occur by not having to employ polling clerks throughout the
country on election day).

And
then at the end of the process, after developing a much broader understanding
of the costs and benefits of all policies, the individuals get to vote on those
policies, and then the results are announced, with the winning 500 MPs taking
their place in Parliament

You may
worry that this will disenfranchise most of the other citizens that don’t get
to vote – but there’s no reason to think this.At the start of play, everyone has exactly the same chance of being
selected, and everyone in the country (both those selected and those not) will
be secure in the knowledge that the people who are going to represent them in
Parliament will have been chosen with more rigour and a higher degree of analytical scrutiny
by highly conscientious citizens in the country. That cannot be as
disenfranchising as the current system in which every single person that votes
knows that that vote
will have the same use as if they’d stayed at home.

What I'd
also predict will happen is that if politicians knew that their policies would
be subjected to proper, rigorous analytical scrutiny - and that they'd have to
be credible to pass intellectual muster - the policies offered would be far
more carefully thought out, and more in tune with a formal economic
accountability.

One would
hope the politicians that made empty promises, and sold policies based only on
benefits with scant regard to costs, and politicians who took advantage of the
electorate from within the comfort of their safe seats, would be greatly
diminished, and in many cases got rid of altogether in my proposed system. Who
knows - it's even possible that higher quality politicians with properly
analysed policies may end up rubbing off on a greater proportion of the
electorate.

Tuesday, 5 December 2017

Government
Minister Greg Clark, the Secretary for Business, Energy and Industrial Strategy,
has unveiled a 255-page white paper explaining the party's industrial strategy for
the nation. The government is promising to 'invest' in our country and increase
productivity with taxpayers' money (although they never mention taxpayers'
money, of course).

These are
promises that should concern us - and the concern should be based on a well
worn economic phenomenon that assesses whether the state should be involved in
an industry at all, or whether it is doing more harm than good.

The assessment
can be stated like this: if the provision of a good or service would have
happened anyway by commercial demand, then it's better if private investors
provide it (as I've explained before repeatedly). If the provision of a good or
service would not have happened anyway by commercial demand, then it's costly
to society for the state to take our money to provide it - even more so when
you factor in all the crony capitalism, self-serving lobbyists and special
interest groups distorting the market.

The upshot is,
when all the costs and benefits are weighed up, there isn't very much that the
state should be doing. Consequently, a strategy that's based on all the things
the government wants to do for us is going to be one that engenders lots of
inefficient use of money that we'd be much better off spending directly out of
our own pockets.

One exception
needs bearing in mind though - and that is the kind of product or service that
is widely desirable but may not be provided by the market - or could be, but may
be better provided by the state. These are what are referred to in economics as
public goods.

Public goods and private goodsThe state
provides some public goods from which we all benefit equally, like national
defence and rule of law, but it also provides private goods like health care,
education and pensions which would be better run under a 'consumer pays' model.
The distinction is that we more or less want the same thing when it comes to
national defence, but not so when it comes to health care, education and
pensions.

Because the
private goods and services that the state provides are devoid of a 'consumer
pays' model, there is no measurement of consumer demand for the goods and
services nor commercial value in how they are costed.

Before
we get into this further, let me deviate for one moment to tell you a shocking
fact connected to state provision. Once you factor in all the stealth taxes on
top of the more transparent taxes, the state takes on average around 60% of our
earnings in taxation. To put that into perspective, that means you have to work
until roughly August 7th each year until you begin to earn money that the state
doesn't somehow confiscate.

A
left wing friend of mine said she thought this was good news because it shows
how much we as a society are willing to show we voluntarily care for one
another in the form of redistribution. As much as I love my friend, this is a
strange view to have because it is just about the opposite of the truth. Tax is
taken from us precisely because we otherwise would not voluntarily donate to
these things (a point I illustrated before by using the example of foreign aid, and here regarding the welfare state). To explain,
let me tell you a bit more about the concept of public goods in economics.

A
public good is something that is referred to in economics as non-excludable and
non-rivalrous, in that agents cannot be effectively excluded from it, and
whereby if one person consumes the good it does make that good unavailable for
others. Obvious things that do not qualify as a public good are things like a
car parking space and a bunch of grapes. If Jack parks in the only available
car parking space, Jill cannot also park there. If Jack buys the last bunch of
grapes, Jill cannot buy them. The nice view of London’s skyline from Primrose Hill, on the
other hand, is a public good because Jack can enjoy it without excluding Jill’s
ability to enjoy it too.

The
problem with public goods is that they have what’s referred to in economics as
a free rider problem. That is, if a good is a public good it is difficult to
prevent others from enjoying that good without having to pay anything towards
its cost. Suppose there is an alley between two terraced houses owned by Jack
and Jill in an area with a recent spate of burglaries. Jack says to Jill ‘Let’s
go halves on a £500 gate to make our alley more secure'.

If
Jill wants the extra security but figures that Jack will pay for the gate even
if she does not pay her half, then Jill free rides on the security, and Jack
foots the bill. Jack may therefore decide to not buy the gate, leaving them
both with a less secure alleyway. If the situation was favourable, the
government could tax the whole street and put up the gates in all the alleyways
on the street. Of course if the alleyway gates are worth their cost to all the
residents, then everyone on the street is better off.

But
then you have to add further consideration, because in a scenario where only
some people paid for alleyway gates, the people that didn’t are made more
vulnerable because their unguarded alleyways are now more attractive to
burglars. The same is true of burglar alarms; if numbers 1, 3 and 5 in a
cul-de-sac install a burglar alarm, numbers 2, 4 and 6 that don't have burglar
alarms are more likely to get burgled.

The
key analysis with tax and government industrial strategy is assessing whether a
good or service is like the alleyway gates, and whether everyone involved is
better off by paying a tax and sharing the benefits, or better off being left to their own
devices in a free market. One obvious example of a public good that everyone
benefits from is national defence: so effectively the nation is treated as a
single consumer paying for this through taxation. Another
example of a similar service is the police force, as is the infrastructure that
provides the framework for the rule of law. There are people, such as David
Friedman in his seminal Machinery of Freedom,
who maintain that even things like defence, police and rule of law don't need
to be provided by governments, but can be sustained instead by non-coercive
market and charity-based systems. But we'll give the state the benefit of the
doubt for now in terms of providing a few of these public goods, even if it is
easy to envisage a time when things may be different.

When taxes are
paid to provide things that the government can provide more efficiently than
the market then we should support them. But that is the only condition under
which a public service like defence or policing is preferable to a private
service. As I reminded people in a recent blog post, public services cost about 30%
more to provide the same equivalent service provided privately, therefore it is
desirable that anything that can be provided by the market is done so, which
doesn't leave the state that much it should be doing, because there are not
many things it can provide better than the market.

Monday, 4 December 2017

Statistics often provoke incredulity.
For example, The London School of Tropical Medicine sent out a report that says
the surplus (stress, that's surplus) food consumed by all the obese people in
the world is enough to feed 1 billion of the world's poorest people. You don't need to be a genius to predict what many will say when they tap away on their keyboards by way of a response:"Ah, so if the over-eaters consumed normal
amounts, we could give all that food to those billion people".Not quite. That's a bit like saying that if we
gave some of Europe's rainfall to Africa, there would be less barren land in Africa. True, but not possible. The same goes with food -
obese people consuming less does not mean that we could feed the billon poorest
people, because what makes them hungry isn’t just lack of food, it is lack of
many of the other things that may otherwise result in enough food.

All that said, it would
certainly be useful if we were all more careful with our food consumption. Perhaps the most useful and practical
measures we can take would be to take the lead of the supermarkets that
voluntarily donate their surplus food and drink to good domestic causes - either by
spending money on the food donation schemes they run, or by adding some extra
items to your shopping basket that you can donate to food banks. On a happy note to end, well done to the Co-op for being the first major retailer to voluntarily sell food on a large scale at a reduced price after its 'best before' date, in an effort to simultaneously cut its losses and reduce its food waste too. What I like most about it is that it's an entirely voluntary decision - no enforcement, no pressure from regulatory bodies - just a straightforward sensible decision that mutually benefits sellers and buyers.

Thursday, 30 November 2017

A reader emailed to ask
about Britain's historical
relationship with free trade and Europe, and
whether the current uncertainty surrounding Brexit makes things precarious for
us. Here's my reply:

There was little free
trade in Britain
until it was taken up consciously as national policy around about the mid 19th
century. Previously, tariffs were sometimes sky high, as in the case of the
French against British wool products, British tariffs against Indian cotton
cloth, etc.

But also there was no mass
immigration because welfare was only available locally to select inhabitants.
The nearest thing we came to it, except very recently, was the French Huguenots
in the early 1700s fleeing persecution. As expected, Londoners kicked up a
stink and a special Act had to be passed allowing them to stay. Excise taxes at
border posts, as before, could be very high.

Of course, Europe then was far different to now - it amounted to lots
of principalities with border posts. Germany
had a score of them and Italy
a dozen until late in the 19th century - so any merchants travelling down the Rhine had to repeatedly pay excises at border posts. Only
a few cities in Europe, such as Antwerp and Hamburg were freer.

It was only when Ricardo's
arguments about free trade started to become more widely appreciated that
cities became freer. David Ricardo would often be heard in the House of Commons
in the early part of the 19th century extolling the virtues of removing
tariffs, but the most the UK responded with was Imperial Preference - whereby,
free trade was freer with its colonies but not with other nations.

Then two world wars
interrupted the free flowing migration of widespread trade, and as well as mass
murder on an unprecedented scale, socialistic tyrannies were spread across lots
of Europe via the Russian, German
and Italian dictatorships. Consequently, many of the resultant post-war government
interventionist policies that followed the world wars set precedents for the
economically stultifying State meddling that we've become so used to in the
past six decades.

Once upon a time, the idea
that Europe would need a bunch of unelected socialist bureaucrats for its
nations to enjoy the free movement of people, goods, services and capital in a
"single market" would have been ludicrous - but alas, that is what we
have with the current EU from which we've just promised to distance ourselves.

During the next sixty
years or so, Britain
became more diverse in its trade agreements with the rest of the world, and
although there have been some serious peaks and troughs, generally we have been
going in the right direction. This has been the beauty of a freer market
unbound by over-regulation and special preference blocs. If it’s beneficial for
Britain to trade with France for wine, Germany
for BMWs, China for steel, Kenya for coffee and Brazil for bananas, then that’s
what will (should) happen.

All any country wants in
terms of trade is to import goods in which foreign exporters have the
comparative advantage, and export goods in which they have the comparative
advantage – and within that process find the nations that have the most
attractive comparative advantage. The Netherlands
may have a comparative advantage over us in terms of fuels and metals, but if
there is an even greater comparative advantage by having a fuel and metals
trade deficit with the United States
and Japan
then that option is preferable.

So trading with anyone
with whom a mutually beneficial transaction occurs is the desired result. Apart
from a few exceptions regarding meeting quality standards, the idea of even
having to talk of 'having access to a market' by going through doors in a politically
constructed labyrinth is preposterous.

One shouldn't forget that,
ostensibly, the post-World War 20th century was unprecedented, and the nations
that came together to co-operate in the reparation job deserve a lot of credit.
We live in the most peaceable Europe we’ve ever
seen, and no doubt attitudes to union and unity have helped. The problem is, I
think it has gone way too far, and there are interferences in our freedoms, and
in prices too, which go way beyond the desire to secure peaceful co-existence.

The European Union has
effectively put up a de facto wall around its bloc to protect its own European
agents from more competitive prices outside the EU, which makes it more
difficult for poorer African, Asian and South American traders to compete. If
the EU opened its barriers to free trade with, say, Africa
on farming, and stopped subsidising its own farmers, as one example, it would
be the first big step towards the revival of the developing nations'
agricultural industries.

Rather like our own NHS on
a smaller scale, the EU is the world’s best living example of the limit of
economies of scale, where once an institution becomes too fattened up you get
dis-economies of scale**, where scores of extra management are added to the
workforce, along with such increased bureaucracy and self-preservation that
lack of communication and inadequate understanding from the top to the bottom,
and sideways too, means there are more problems than solutions. I think history
will show that our coming out was a good thing for us, and a catalyst for good
in Europe too as other
nations will follow suit.

Then of course there is another
charge to level against big bureaucracies - it's what's called the Ringelmann
effect, which is the tendency for individual members of a group to become
increasingly less productive as the size of their group increases. A good
example is in a tug of war event, where you'll usually find there is an inverse
relationship between how many of you there are pulling your team's side of
the rope, and the magnitude of each agent's individual contribution to the total
effort.

Another
example, when you're in a crowd and the speaker enters the stage and says good
morning, there is usually a murmured response. When he says "come on you
can do better than that", the reciprocation is much louder. The volume of
the words you utter will be less loud than if you were asked to respond on your
own.

This phenomenon
of increased group size resulting in lower individual effort or productivity is
also known in psychology as social loafing. Large institutions like the EU, the
civil service, and local authorities are going to be replete with social
loafing, particularly when you factor in Parkinson's
law and the Allen curve,
which is even more reason why we're better off out of it.

Wednesday, 29 November 2017

It’s time that humanity
moved forward with its understanding of how humans define one another. Here’s
some practical advice - it certainly works for me. Ditch the term ‘race’ when
trying to define individuals according to their skin colour or nationality. The
word ‘race’ has too many negative connotations and associative
misunderstandings about what humans are and how they treat one another - it's time to wise up!

It’s far better to use the
word ‘race’ in terms of our being the human race, although personally I prefer
to say the human species. Either way, race or species refers to us humans as a
collective, and with that, all the shared genetics, behaviours, evolutionary
legacies, hopes, dreams, fears, insecurities and curiosities that bring about a
kind of oneness implicit in our species.

After that, we have a
breakdown of different types of human, where race used to mean anything from
skin colour, to facial features, to wherever on the planet someone comes from.
Needless to say, there is a word that adequately covers a breakdown of the
human species in terms of belonging to a social group that has a common
national or cultural tradition - and that word is ‘ethnicity’, which includes
one’s heritage, and 'nationality' which includes the status of belonging to a particular nation.

People from Germany or Canada
or Ethiopia
have a different nationality, ethnicity and heritage, but they are all part of the same
human race. That’s why, when a child is born from a German father and an
Ethiopian mother, they are dual heritage, not mixed race.

Skin colour is also
nothing to do with race. Skin colour is to do with a number of genetic factors,
which is linked to ethnicity too - but at a genetic level, melanin is the
primary determiner of skin colour. If the human race is the only viable
definition of race, and if skin colour is genetically determined, then racial
discrimination on the basis of skin colour is a foolish, short-sighted misnomer.

I mentioned genetics, and
genetics is another way that the human race can be broken down into categories.
There are relatively very few differences in the number of genes between
organisms. The human genome
has 3 billion nucleotides but only somewhere between 20,000-25,0000 genes. A gene is a rather
arbitrary designation anyway - it simply means a series of nucleotides that code a
protein. Most evolutionary changes are the result of gene duplications, inversions
and translocations.

The pretexts that people
have used (and sadly still use) to determine a basis of racial discrimination
are both arbitrary and ill-conceived. Their definitions bear no relation to
similarity or diversity in the genetic populations. For example, generally
speaking, there is more genetic diversity between a man in Nigeria and a man in Kenya
than there is between a man in Nigeria
and a man in Belgium, Holland or Spain.

This is because humans
originated in Africa, and there have been longer execution times for mutations
to have occurred in Africa than in the shorter time that humans have migrated
to Europe. The longer the time for mutations,
the greater the genetic diversity - so perceived genetic similarity as a basis
for racial discrimination is also absurd, and always has been.

So, let's recap: skin
colour is down to genes; ethnicity and heritage is where in the world you come
from and the culture(s) with which you identify, and the only way that race
should have any meaning is in recognising that human beings are one species,
and that what makes us different is miniscule compared with all the things that
make us remarkably similar.

Now we have got all that
straight, let's all use the appropriate language to help move towards a
post-racial world, where our place of birth, our skin colour, our nationality, culture and
heritage, and our genetic features are not tools for contention and division -
and where someone can get engaged to someone else of a different heritage and
no one thinks even the slightest thing of it.

EDIT TO ADD: There have been a
few people (although far in the minority) unhappy with me that I am triviallising
'race' as a valid genetic subspecies description.

Indeed, yes, I am, because
even a sketchy understanding of genetics will tell you that race does not easily
conform to a genetic subspecies description. If genetics is the way one wants
to frame this, then 'race' as a synonym for subspecies is very unsound
genetically. A genetic basis for demarcating race is nothing like as pronounced
as you may think. Genetic variations among populations that are spuriously
called different races are much smaller than is often imagined, and this will
continue to narrow more and more as we move forward as a species and become
even more globally diversified.

As I hinted in the Blog, the
genetic differences between a person from Nigeria
and a person from Sweden
are frequently fewer on average than the genetic differences between many sets
of people who onlookers might say are from the same race based on all kinds of
loose descriptive terms. Genetics demonstrates that what you might call race
blend seamlessly together through all sorts of genotypic variations - the
change is a continuum.

There is relatively very
limited genetic variation in the human species in terms of what people
habitually call race with regard to genetic markers. The odds are the genetic
difference between you and an equatorial African is not greater than the
genetic difference between you and your next door neighbour who you may well
call the same race.

Evolution has played a
long percentage game in shaping us over hundreds of thousands of years, and compared
to all the ways humans are similar, nothing about human beings in any area
you'd care to mention is genotypically, phenotypically or psychologically
distinct enough to warrant more than a tenuous acknowledgement of fairly
trivial differences. Further, most of what humans define as races are a
hotchpotch of localities, not even terribly distinct ones. The vast majority of
this diversity reflects individual genotypical uniqueness far more than it does
the race definition.

Degrees of genetic
differentiation are primarily about containing some unique alleles or sometimes
different frequencies of alleles. What is actually required is a level of
genetic differentiation that is well above the degree of genetic differences
that actually exist among what people who observe local populations call a
'race'.

The next time someone
tries to tell you that race is an established definition for subdivisions of
the human species, ask them the following: using the criterion of genetic
differentiation alone, what sufficient delineation would you posit as
satisfactory to define a race within the human species? It is very unlikely
you'll get an answer, and if you do, it won't be an empirically satisfactory genetically
distinctive subdivision of homo sapiens, as there is also no classification of
DNA sample that is amenable to a straightforwardly defined racial population or
racial phenotype.

And finally, even if we're
super-generous to the point of choosing to ignore all of the above, it is still
the case that nationality, ancestry, ethnicity, heritage and skin colour perfectly
well cover the definitions required, and do so better than the more ambiguous,
and sometimes totally incorrect, term race.

Put it this way. If I
asked a random selection of people to name an instance when race is used
without there being a less ambiguous alternative, people would struggle. On the
other hand, if I asked a random selection of people to name cases where race
was used to describe something that is better defined by another term, no one
would have any trouble naming an example.

This is what I think is
going to start to change in the coming decades. Language is always evolving,
and many of the terms that get modified are done so because their original
appearance came at a time when humans understood a lot less about these things.
And this in a world that is becoming ever more connected and genetically
diverse.

Sunday, 26 November 2017

Here's my latest Q&A column - if you have
any questions for me, you can message me on Facebook, or email them here j.knight423@btinternet.com

Q) My
husband and I both work full time, and take it in turns to cook the evening
meal. He thinks it is better if the one who cooks also washes up, giving each
of us one night off from the kitchen out of every two. I would prefer a system
where one cooks and the other washes up. Who is right?

A)
You both have points in your favour. Your case makes the best out of utility
but the worst out of efficiency, whereas his does the opposite. After cooking
dinner, the cook has diminishing utility which makes washing up harder for him
or her than for the other, which is an argument in favouring of a system where
one cooks and the other washes up. But preparing and cooking dinner involves
externalities in the form of making mess, so a system whereby the cook also
washes up incentivises him or her to make as little mess along the way as
possible. In
an ideal scenario, your system if preferable, as long as you both signal your
care for the other one by making as little mess as possible along the way.
Failing that, get a dishwasher!

Q) Dear
Philosophical Muser, What is the overall effect of cycling helmets on accident
and emergency units in the hospital?

A) Dear Reader, I've no
idea, but I could hazard a guess. While cycle helmets greatly reduce what would
otherwise be minor injuries, they also convert some accidents from fatal to
near-fatal or serious injury - meaning, if that is the principal concern of your enquiry, they are likely to place an extra strain
on the NHS. The other thing to consider is that even in absolute terms they may not benefit the cyclist, particularly if drivers are more likely to drive less cautiously around a cyclist with a helmet on. Equally, it may also be the case that people who ride with cycle helmets on are, on average, safer and more conscientious riders than those that do not. Or it may be true that cyclist with helmets on feel safer and therefore ride less safely. All these have to be factored in to the analysis. EDIT TO ADD: There is a debate going on at the moment as the government is considering whether to make it mandatory for riders to wear a cycle helmet. Alas, both those for the proposal and those against it are basing all their arguments only on what they perceive is the least risky and statistically safer - they are giving almost no thought to the most important factor: the freedom of individuals to decide how they wish to ride - with or without a cycle helmet. It is not the state's job to try to govern in loco parentis, whether that's on the matter of cycle helmets, alcohol, cigarettes, fatty foods, or whatever. There are costs and benefits to all things, and it is the job of the individual to decide how they weigh up those costs and benefits with regard to their own utility. Some prefer to cycle without a helmet, saving on the cost of the helmet, increasing their awareness of what's going on around them, and knowing that they will cycle more cautiously without a helmet on, and drivers around them will likely to the same. Some, on the other hand, prefer to buy the helmet because the costs of having a helmet are less to them than the benefits. Both those decisions are absolutely fine, which is why the state should not a pass a law that makes wearing cycle helmets compulsory.

About Me

This is the Blog of James Knight - a keen philosophical commentator on many subjects.
My primary areas of interest are: philosophy, economics, politics, mathematics, physics, biology, chemistry, theology, psychology, history, the arts and social commentary.
I also contribute articles to the Adam Smith Institute and the Institute of Economics Affairs.
Hope you enjoy this blog! Always happy to hear from old friends and new!
Email:j.knight423@btinternet.com